When Secretary of Transportation Elaine Chao previewed the Trump Administration’s upcoming infrastructure plan this week, she outlined an effort that will involve the entire nation.
The federal government will of course play a pivotal role in financing the infrastructure initiative. Local and state governments will need to step up as well.
Importantly however, Chao also placed significant responsibility on the private sector.
“A key feature of the infrastructure plan will be unleashing the billions of dollars in private capital available for investment in infrastructure,” Chao said at an event marking the first day of infrastructure week.
While the plan’s details are yet to be worked out, it is clear the power of the private sector will be necessary to meet America’s severe funding challenge.
At S&P Global, we welcome her challenge. Since our founding in 1860 providing investor guides on the U.S. railroad industry, S&P Global has provided the essential intelligence market investors need on infrastructure.
We also understand the importance of data and its potential implications, so here is one figure that should alarm all of us: The American Society of Civil Engineers estimates that the gap, left unaddressed, between total infrastructure needs and estimated funding will be roughly $2 trillion through 2025. Put simply, public spending alone is failing to fill the widening gap between infrastructure needs and levels of current funding.
We see this as an opportunity for investors to step in with much needed capital — as it did with funding the U.S. railroads in the 1800s, linking our country from ocean to ocean, and creating with it thousands of jobs. Except today, much of the investor interest could come from pension funds seeking to meet the retirement needs of workers — in effect putting the retirement savings of Americans to work helping to address the infrastructure needs of their own communities.
To close the infrastructure gap, it is time for stakeholders across the United States to embrace every effective strategy to rebuild our roads, bridges, ports and waterways and make America’s infrastructure the envy of the world.
U.S. policymakers should start by encouraging private-sector investment and facilitating it at all levels of government.
What approaches would work? The CEOs of The Business Roundtable have outlined a set of core recommendations in our new report, Back in Business: A Blueprint for Renewing American Infrastructure. They include supporting and incentivizing public-private partnerships, supporting and recapitalizing state infrastructure banks, preserving and expanding tax-preferred bond options, as well as expanding access to federal credit programs — such as the Transportation Infrastructure Finance and Innovation Act, the Water Infrastructure Finance and Innovation Act and the Railroad Rehabilitation and Improve Financing programs.
America has substantial resources to rebuild our infrastructure, if we do it right. A tremendous reservoir of private capital is available for funding infrastructure projects that will revitalize our communities and lay a foundation for economic growth; U.S. businesses stand ready to partner with the public sector to help lead the way.